New COBRA Notice Requirements

When an employee leaves your company (if you employ 20 or more people), he or she is entitled for at least 18 months to continue any group health insurance coverage that you provide to your employees. This continuation coverage requires that the employee pay the insurance premiums to remain on your group health plan. Therefore the employee must be notified when he leaves your employ of the rights he has to elect to continue that coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). The same election notice must be provided to the employee or his/her dependents if the employee dies, the employee divorces, the employee becomes entitled to Medicare, or a dependent child ceases to be considered a dependent under the health plan.

On May 8, 2013, the Department of Labor updated the election notice you must provide to your employees under COBRA when these events happen. The notice has to be provided to the employee within 14 days of when the plan administrator (you as the employer or an administrator you pay to take care of this function) receives notice that one of the these events has occurred. The new election notice and a redlined version showing what has been changed from the notice you are now using is available on the DOL’s website at: http://www.dol.gov/ebsa/COBRA.html. COBRA carries a stiff daily monetary penalty for employers or administrators who do not timely and properly provide these election notices, so you should start using the new notice immediately.

The DOL also publishes a guide to help you understand and administer COBRA: http://www.dol.gov/ebsa/pdf/cobraemployer.pdf. However, because COBRA can be tricky, I prefer that my employer clients pay the little extra fee per month to have your insurance company act as your COBRA administrator and take responsibility to assure that the deadline and notice requirements are met.